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Latest Equifax data shows continued interest in subprime to open 2019

Monday, May. 20, 2019, 11:23 AM

By SubPrime Auto Finance News Staff

ATLANTA -

The latest auto-finance information available from Equifax revealed trends that made the company give bullish projections of what the subprime slice of the market might be like for the rest of the year.

Equifax’s auto-loan originations observations through January reported as of March indicated that 1.78 million contracts, totaling $41.3 billion, have been originated year-to-date. This data marks a 0.8% increase in accounts and a 2.8% increase in balances over this time last year.

Analysts tabulated that 379,100 auto loans have been originated year-to-date to consumers with a VantageScore 3.0 credit score below 620, which are generally considered subprime accounts. Equifax determined this figure represented a 1.9% increase from January 2018.

The company computed these newly issued subprime contracts have a corresponding total balance of $7.07 billion, a 5.3% increase year-over-year.

Through January, Equifax found that 21.3% of auto contracts were issued to consumers with a subprime credit score, and they accounted for 17.1% of origination balances. In 2018, year-to-date, the account share was 20.7%, and balance share was 16.4%.

Analysts went on to mention the average origination amount for all auto loans issued in January 2019 was $23,464. This figure marked a 3.3% increase over January 2018.

Equifax added the average subprime contract amount was $18,934. This figure is a 5.0% increase compared to January of last year.

“While subprime origination activity and balances remain steady and in check, the data is showing an increase entering the year,” said Jennifer Reid, Equifax’s vice president of automotive marketing and strategy.

“Prices on new cars and trucks continue to rise, but I think we’re seeing more evidence through subprime numbers that there is continued interest and activity in used vehicles for 2019,” Reid continued. “We anticipate this will persist in the coming months.”

Update on leasing

Equifax also discussed how the leasing market is performing through January and reported as of March.

Analysts found that 279,400 auto leases, totaling $4.8 billion, have been originated year-to-date. This is a 3.4% decrease in accounts and a 3.0% increase in balances from this time last year.

Equifax pointed out auto leases accounted for 13.6% of all auto accounts originated through January and 10.5% of balances.

The credit bureau also learned that 25,000 auto leases have been originated year-to-date to consumers with a VantageScore 3.0 credit score below 620, which again are generally considered as subprime accounts. That amount represented a 3.3% decrease from January of last year. These newly issued leases have a corresponding total balance of $462.1 million, a 4.6% increase year-over-year.

Through January, Equifax determined 8.9% of auto leases were issued to consumers with a subprime credit score. Through January of last year, the company said the share was the same.

Finally, the average origination balance for all auto leases issued in January was $17,137, according to Equifax. This amount marked a 5.7% increase from last January. The average subprime lease amount was $18,150, a 6.3% increase over a year ago.